Cheaper to buy than rent

handlemaster · 29-11-2014 8:47am #1

According to indo its cheaper to buy than rent. Are buyers finding this to be true ?

http://m.independent.ie/business/personal-finance/property-mortgages/mortgage-payments-are-now-lower-than-renting-30784040.html

ted1 · 29-11-2014 9:13am

handlemaster wrote: »

According to indo its cheaper to buy than rent. Are buyers finding this to be true ?

http://m.independent.ie/business/personal-finance/property-mortgages/mortgage-payments-are-now-lower-than-renting-30784040.html

Mortgage = 830, rent achievable is 1650.
So yeah the article is correct

handlemaster · 29-11-2014 9:24am

ted1 wrote: »

Mortgage = 830, rent achievable is 1650.
So yeah the article is correct

Where is this viable ? What property can be bought with normal deposit of 10-15% and give these figures. I dont think Any.

dubrov · 29-11-2014 9:32am

In fairness, interest rates are currently at ridiculously low levels. When they return to more normal levels I would expect renting to be cheaper than a mortgage

handlemaster · 29-11-2014 9:38am

dubrov wrote: »

In fairness, interest rates are currently at ridiculously low levels. When they return to more normal levels I would expect renting to be cheaper than a mortgage

Fixed rates for the life time of the mortgage should be standard.

mav79 · 29-11-2014 9:41am

Looking at monthly mortgage repayments and monthly rents is a very simplistic way of looking at which is cheaper. There is no mention in the article about all the other monthly costs involved after buying a house compared to renting, like maintenance fees, home and life insurance fees and the basic upkeep of a property.

ted1 · 29-11-2014 9:43am

dubrov wrote: »

In fairness, interest rates are currently at ridiculously low levels. When they return to more normal levels I would expect renting to be cheaper than a mortgage

At 4.4% there twice what other countries are. Only trackers are low

ted1 · 29-11-2014 9:44am

mav79 wrote: »

Looking at monthly mortgage repayments and monthly rents is a very simplistic way of looking at which is cheaper. There is no mention in the article about all the other monthly costs involved after buying a house compared to renting, like maintenance fees, home and life insurance fees and the basic upkeep of a property.

You forgot the mention that you get cash when you dispose of the property

mav79 · 29-11-2014 9:46am

ted1 wrote: »

You forgot the mention that you get cash when you dispose of the property

Or else you have debt for years still hanging over your head.

ted1 · 29-11-2014 10:30am

mav79 wrote: »

Or else you have debt for years still hanging over your head.

There's very few people in Dublin with negative equity. Prices have rising and people are paying their mortgages and reducing debt

jon1981 · 29-11-2014 2:24pm

dubrov wrote: »

In fairness, interest rates are currently at ridiculously low levels. When they return to more normal levels I would expect renting to be cheaper than a mortgage

Not true. They are above normal when compared with EU average. Only incressing the supply of suitable housing will make the difference.

dissed doc · 29-11-2014 2:34pm

ted1 wrote: »

There's very few people in Dublin with negative equity. Prices have rising and people are paying their mortgages and reducing debt

That is true. If people managed to ride out the crash in prices, the current combination of low mortgage tracker rates and concurrent stabilization means that plenty of people are now not in negative equity, and the rent more than covers costs and taxes of rent.

o1s1n · 29-11-2014 2:41pm

handlemaster wrote: »

Fixed rates for the life time of the mortgage should be standard.

Why? A competitive mortgage market will offer more options, not less.

lima · 29-11-2014 3:13pm

ted1 wrote: »

There's very few people in Dublin with negative equity. Prices have rising and people are paying their mortgages and reducing debt

That really depends. at my age, most of my friends bought during the boom and are all around 200k in negative equity. I'm sure many who bought from 2005-2008 are in negative equity, or if they are not then their house is worth a lot less than they paid for it.

lima · 29-11-2014 3:17pm

handlemaster wrote: »

According to indo its cheaper to buy than rent. Are buyers finding this to be true ?

http://m.independent.ie/business/personal-finance/property-mortgages/mortgage-payments-are-now-lower-than-renting-30784040.html

Good old predictable Charlie Weston trying to insight panic again :rolleyes:

It's been cheaper to buy than rent for years, why mention it on the front of the independent now? is it because it's feared FTB's are putting off buying? Trying to push an agenda to stop the CB's 20% thing? you'd swear this tabloid is involved in some conspiracy to inflate property prices :rolleyes:

Plus, I'd like to hear more opinions other than Karl Deeter and Ronan Lyons, and more articles not written by Charlie Weston.

Such a bad tabloid 'paper' with vested interests.

kandoola · 29-11-2014 5:03pm

mav79 wrote: »

Looking at monthly mortgage repayments and monthly rents is a very simplistic way of looking at which is cheaper. There is no mention in the article about all the other monthly costs involved after buying a house compared to renting, like maintenance fees, home and life insurance fees and the basic upkeep of a property.

The way I look at it is that after 25 or 30 years the monthly payments stop with a mortgage.
They go on forever when you rent.
That was enough of a frightener for me to buy.

For example, i posted in another thread about my parents mortgage, which is ending in under 2 years time.

Funny you should say that.
My parents are just about 70 and in the last 2 years of their mortgage on their house in Deansgrange.
Its €245 per month.
I pay this for them. I certainly am glad I am not paying the rent that the same house would cost instead. It would probably be about €3000PM nowadays.

On a side note I was at a talk from a major economist (not about property but he went into talking about property when asked by someone) a few weeks ago and he said that apartments are expected now to drop in value. If there are thousands of new apartments built in Dublin, bigger and better serviced, and with rock bottom management fees to attract buyers than existing ones and somehow built at a cheaper price, then he expects current apartments in Dublin to at least half in price.

Now that would scare me out of buying an apartment at this time big time.

Its all getting very confusing.

athtrasna · 29-11-2014 5:21pm

Can you change the thread title please? It directly contradicts your OP

The_Morrigan · 29-11-2014 5:25pm

athtrasna wrote: »

Can you change the thread title please? It directly contradicts your OP

Done.

/Mod

ted1 · 29-11-2014 5:27pm

lima wrote: »

That really depends. at my age, most of my friends bought during the boom and are all around 200k in negative equity. I'm sure many who bought from 2005-2008 are in negative equity, or if they are not then their house is worth a lot less than they paid for it.

So did my friends, buying in 2005 on a 25 year mortgage would see you 40% through it and at current prices you'll find that if you sale you could pay off the remainder.

Several of my friends ( who bought this year)have sold houses and apartments they bought during the tiger years and were surprised to have made a profit.

hidinginthebush · 29-11-2014 5:32pm

mav79 wrote: »

Or else you have debt for years still hanging over your head.

True, but you miss a few months rent and you're out on your arse, can't pay your mortgage, you declare bankruptcy, and even if there is a risk you'll be thrown out the various support groups will rally being you the ensure the bank back pedals any decision of repossession.

murphaph · 29-11-2014 6:28pm

lima wrote: »

That really depends. at my age, most of my friends bought during the boom and are all around 200k in negative equity. I'm sure many who bought from 2005-2008 are in negative equity, or if they are not then their house is worth a lot less than they paid for it.

And if they managed to get one of those trackers at ECB + 0.5% the total cost might still be lower than what someone buying today will pay with eye wateringly expensive mortgage interest rates, when compared to core Eurozone states.

handlemaster · 29-11-2014 6:31pm

o1s1n wrote: »

Why? A competitive mortgage market will offer more options, not less.

if payments are fixed for the entirety of the mortgage you know what to pay every month no surprises. this can be still competitive for all involved. certainty breaths confidence. its common in other european countries

Moonbeam · 29-11-2014 6:40pm

had it not always been cheaper to pay a mortgage then rent? but cheaper no I don;t think so maintenance costs a small fortune in some houses .

*edit* I realise always is the wrong word so for the last 15 years.

lima · 29-11-2014 6:56pm

murphaph wrote: »

And if they managed to get one of those trackers at ECB + 0.5% the total cost might still be lower than what someone buying today will pay with eye wateringly expensive mortgage interest rates, when compared to core Eurozone states.

Possibly but someone buying today may have a large deposit saved up, I have over 100k myself to put towards a place, so (in my case) this coupled with the low prices relative to 2007 means I'm well better off plus im not stuck in the outskirts of Dublin

lima · 29-11-2014 7:00pm

kandoola wrote: »

On a side note I was at a talk from a major economist (not about property but he went into talking about property when asked by someone) a few weeks ago and he said that apartments are expected now to drop in value. If there are thousands of new apartments built in Dublin, bigger and better serviced, and with rock bottom management fees to attract buyers than existing ones and somehow built at a cheaper price, then he expects current apartments in Dublin to at least half in price.

Now that would scare me out of buying an apartment at this time big time.

Its all getting very confusing.

Yeah but its not going to happen with apts. Not in the short-medium terms

1. It'll take years for any to be built
2. They'll have to be build outside the city as there is no room for apts close to the city centre.
3. Any large blocks of apts that are empty are being sold to large US funds who are renting them out, thus keeping the price high due to a lack of apts in the city.
4. I've been looking for 2 years and every apt I bid on is eventually sold to a cash investor, so I'm assuming they know a bit!

murphaph · 29-11-2014 7:27pm

lima wrote: »

Possibly but someone buying today may have a large deposit saved up, I have over 100k myself to put towards a place, so (in my case) this coupled with the low prices relative to 2007 means I'm well better off plus im not stuck in the outskirts of Dublin

If you'd had a low margin tracker you would have seen nothing but mortgage payment reductions since the crash, same as the reducing rents, so no advantage to renting during that period IMO and you'd have been equally well able to save.

murphaph · 29-11-2014 7:47pm

lima wrote: »

2. They'll have to be build outside the city as there is no room for apts close to the city centre

Proper minimum 30 storey development of the docklands and problem solved. There's no solid argument not to move large parts of Dublin Port's operations out of the city to north county Dublin. The container handling aspects could be moved in short order, whatever about the bulk liquids.

kandoola · 29-11-2014 7:58pm

lima wrote: »

Yeah but its not going to happen

Oh if I had a euro for everyone i heard say that in 2001,2,3,4,5,6 i'd be a rich man

ted1 · 29-11-2014 8:18pm

murphaph wrote: »

Proper minimum 30 storey development of the docklands and problem solved. There's no solid argument not to move large parts of Dublin Port's operations out of the city to north county Dublin. The container handling aspects could be moved in short order, whatever about the bulk liquids.

It won't work, unlike other cities dublin has a low sun, so the footprint needed for a 30 storey building prividing x is actual the same as a several 6 stories prividing x. Buildings shoukdnt cast shadows, if you are actually interested there's done good studies that you should look up.

ted1 · 29-11-2014 8:20pm

lima wrote: »

Yeah but its not going to happen with apts. Not in the short-medium terms

1. It'll take years for any to be built
2. They'll have to be build outside the city as there is no room for apts close to the city centre.
3. Any large blocks of apts that are empty are being sold to large US funds who are renting them out, thus keeping the price high due to a lack of apts in the city.
4. I've been looking for 2 years and every apt I bid on is eventually sold to a cash investor, so I'm assuming they know a bit!

You should have but the bullet a few years back, your large deposit effectively is worthless now as the apartments that you didn't go ahead with have increased by much more than 100k

dubrov · 29-11-2014 11:04pm

kandoola wrote: »

On a side note I was at a talk from a major economist (not about property but he went into talking about property when asked by someone) a few weeks ago and he said that apartments are expected now to drop in value. If there are thousands of new apartments built in Dublin, bigger and better serviced, and with rock bottom management fees to attract buyers than existing ones and somehow built at a cheaper price, then he expects current apartments in Dublin to at least half in price.

Now that would scare me out of buying an apartment at this time big time.

Its all getting very confusing.

A lot of ifs and buts there. I don't see how apartments can be built bigger and better serviced but built at a cheaper price with lower management fees.
It is pretty much a contradiction.

Obviously more supply will put downward pressure on prices. At least this major economist remembered something from school

lima · 30-11-2014 12:09am

murphaph wrote: »

If you'd had a low margin tracker you would have seen nothing but mortgage payment reductions since the crash, same as the reducing rents, so no advantage to renting during that period IMO and you'd have been equally well able to save.

Yeah but their 400k property is now only worth 200k

lima · 30-11-2014 12:10am

ted1 wrote: »

It won't work, unlike other cities dublin has a low sun, so the footprint needed for a 30 storey building prividing x is actual the same as a several 6 stories prividing x. Buildings shoukdnt cast shadows, if you are actually interested there's done good studies that you should look up.

low sun? can you explain?

ted1 · 30-11-2014 12:11am

lima wrote: »

Yeah but their 400k property is now only worth 200k

Try 300+. Rent on a place would be 15,000 a year.

lima · 30-11-2014 12:13am

ted1 wrote: »

You should have but the bullet a few years back, your large deposit effectively is worthless now as the apartments that you didn't go ahead with have increased by much more than 100k

Actually they haven't

I just bought one for the same price I was looking at in 2012, with a hefty deposit.

Apts in city centre have gone up and I defo lost out there but most of them were tiny 600sqft shoeboxes so I got a better deal in the end

ted1 · 30-11-2014 12:13am

lima wrote: »

low sun? can you explain?

Yeah the sun is low in the Sky which causes long shadows.

lima · 30-11-2014 12:14am

ted1 wrote: »

Yeah the sun is low in the Sky which causes long shadows.

What about our long summers?

lima · 30-11-2014 12:16am

ted1 wrote: »

Try 300+. Rent on a place would be 15,000 a year.

There may be some places like that but I know plenty of people who bought in north county dublin for over 400k for a 2br apt and they are going for around 200k now, and the rent is less than 1k for these places

lima · 30-11-2014 12:19am

Also a point to make is as I do my calculations on owning I have come to realise that there is only a tiny difference in the cost of buying vs renting. All you're really getting out of it is saving perhaps 2-300 per month, with the added risk of owning which could frankly go either way looking forward.. scary!

2013Lara · 30-11-2014 12:28am

It is certainly much cheaper for us, even with property tax and maintaining the house. Our mortgage is 710 Euro per month. We have a 90% mortgage that we began to pay Last month. To rent the same size house locally is 11/1200 Euro monthly.

ted1 · 30-11-2014 12:33am

lima wrote: »

What about our long summers?

Summers? You mean the 12th of August. ðŸ˜†
From September Till April all drivers will have their visors down because the sun sits low in the sky. So this causes long shadows. Public spaces need to be provided and they shouldn't be in the shade.

P. Breathnach · 30-11-2014 12:38am

lima wrote: »

Also a point to make is as I do my calculations on owning I have come to realise that there is only a tiny difference in the cost of buying vs renting. All you're really getting out of it is saving perhaps 2-300 per month, with the added risk of owning which could frankly go either way looking forward.. scary!

It's rather less scary if you have bought a place that suits you in the long term rather than the short or medium term. Negative Equity is no more than an interesting idea if you do not want or need to sell.

lima · 30-11-2014 12:39am

ted1 wrote: »

Summers? You mean the 12th of August. ðŸ˜†
From September Till April all drivers will have their visors down because the sun sits low in the sky. So this causes long shadows. Public spaces need to be provided and they shouldn't be in the shade.

Do you have any links about this? It would make sense for winter when the sun us low but not for summer when the sun is high. We have long days from may to September and we get a lot of light well into the evening

Also what about cities on higher latitudes than us with tall buildings e.g Stockholm?

lima · 30-11-2014 12:40am

P. Breathnach wrote: »

It's rather less scary if you have bought a place that suits you in the long term rather than the short or medium term. Negative Equity is no more than an interesting idea if you do not want or need to sell.

Yeah but you still have a noose around your neck and no one wants to be trapped by that

ted1 · 30-11-2014 12:45am

lima wrote: »

Yeah but you still have a noose around your neck and no one wants to be trapped by that

You see you don't own a place and think of it as a noose around the neck. Where as I think of it as being liberating.
My kids have a bedroom they can paint and destroy and make as much noise as they want , I can dig up the garden and plant what eve fruit and veg I want. I can retire at 55 and have a place to live without having to pay rent or anything. As I bought our family home in 2012 I can sell it and pocket twice as much as I paid for it, in fact I paid 210,000 with an 8% deposit and could sell it for 450 so my 18k can be converted to 280k cash.

With regards a link I'm on my phone so no , but could dig one out when back on a PC

Arbiter of Good Taste · 30-11-2014 12:47am

lima wrote: »

Yeah but you still have a noose around your neck and no one wants to be trapped by that

The fact that there is severe upward pressure on property prices suggests that a lot of people are prepared to accept that.

o1s1n · 30-11-2014 1:46am

handlemaster wrote: »

if payments are fixed for the entirety of the mortgage you know what to pay every month no surprises. this can be still competitive for all involved. certainty breaths confidence. its common in other european countries

That's fine for people who want to have a fixed payment for the term of the mortgage. In our case we didn't and are on a variable. I'd rather the option to try and pay it off early via over payments.

Thankfully we live in a country where both options are available.

MouseTail · 30-11-2014 8:08am

lima wrote: »

Also a point to make is as I do my calculations on owning I have come to realise that there is only a tiny difference in the cost of buying vs renting. All you're really getting out of it is saving perhaps 2-300 per month, with the added risk of owning which could frankly go either way looking forward.. scary!

in the first year perhaps, what about the 10th year, the 20th year, is there still only savings of €200 pm, what about once the mortgage is redeemed, is there still only a small differential?

Call me Al · 30-11-2014 8:55am

lima wrote: »

Yeah but you still have a noose around your neck and no one wants to be trapped by that

Noose around your neck?
I think I'd prefer to be paying my mortgage now, when we have an income coming in, than risk the uncertainties of renting as I reach my pension years without the potential to earn and not owning the house I've lived in outright.

I'd just hate to be facing into that for what I'd like to think would be 20 years.

kandoola · 30-11-2014 9:14am

dubrov wrote: »

A lot of ifs and buts there. I don't see how apartments can be built bigger and better serviced but built at a cheaper price with lower management fees.
It is pretty much a contradiction.

Obviously more supply will put downward pressure on prices. At least this major economist remembered something from school

Isnt that what all of the problems with apartments were and are?

Too small, Too expensive, Unfairly high management fees. Bad locations.

If you want people to buy new ones you have to take care of these problems.

Not a contradiction that I can see.

dubrov · 30-11-2014 10:00am

High management fees are not a product of the quality of construction.
Of course management fees can become very high if members of the management company take little interest in monitoring them.
This applies to new and old developments,

More services => Higher management\service fees
Bigger apartments => Larger construction costs

Sure, there were loads of apartments built in bad locations but I think they have already seen a proportionately higher drop than those in better locations.

As far as I can tell, there seems to be huge demand to rent apartments in the city centre. This can only push up sale prices as well.
Judging by current rental prices, there is a need for many more apartments to be built there.

Cheaper to buy than rent

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